Hickenlooper supports mine request for royalty reduction

August 30, 2017332 Views

Based on efforts to capture methane…

By Mark Reaman

Colorado governor John Hickenlooper notified the Bureau of Land Management this week that the state would support a “royalty rate reduction application for coal leases” in connection with an expansion of the West Elk Mine near Paonia.

Those rate reductions apply only to the so-called E-seam, which runs through areas of the mine that Arch contends, and the BLM agrees, are geologically challenging.

In a letter dated August 25 to the acting state director of the BLM, Gregory Shoop, Hickenlooper indicated he approves of Arch Coal’s request to reduce the royalties paid to the state and local government from 8 percent to 5 percent with a caveat.

“This support is contingent on Mountain Coal’s (a subsidiary of Arch Coal) stated commitment to work collaboratively with Gunnison and Delta Counties, the State of Colorado and others to explore and develop a methane capture strategy at the mine, as well as to explore opportunities to put the methane to beneficial use,” the governor’s letter states.

Hickenlooper acknowledges the reduction will result in a loss of revenue to the state of approximately $4 million over a five-year period.

“The State supports this request subject to local government support, the economic value this money provides to the North Fork valley and the State of Colorado, and the Company’s commitment to developing a strategy to capture methane emissions,” the letter reads. “The company has committed to working with the community and other stakeholders to develop ways to capture methane, and to explore ways to use the methane that would otherwise be vented.”

Hickenlooper made it clear the state’s support for the royalty reduction was dependent on the mining company’s commitment to pursuing methane capture.

HCCA disappointed

High Country Conservation Advocates public lands director Matt Reed expressed frustration with Hickenlooper’s action, noting that the state already can regulate such emissions.

“The governor’s office has been taking the position that there is little it can do to limit methane pollution from the West Elk mine, at least when it comes to processes for which BLM is the ultimate decision maker. Hence, its royalty rate acquiescence,” Reed stated. “HCCA believes this is incorrect. First, the state can enforce current law requiring permits for coal mine vent emissions, action the state’s air pollution inspectors have long recommended.

“Second, the state can initiate a rulemaking to limit coal mine methane emissions,” Reed continued. “Alternatively, Gunnison County or members of the public may petition the state for such a rulemaking to force the issue.”

Overall, Reed said, the Hickenlooper letter carries some weight. “HCCA is disappointed that Governor Hickenlooper has consented to Colorado taxpayers subsidizing the state’s largest methane polluter. Hickenlooper admits that this will cost Colorado taxpayers $4 million,” he said. “Federal revenues will also drop by $4 million. The governor bases his support for royalty reduction on the fact that Arch is willing to ‘work with the community’ on methane capture. But it’s unclear whether Arch has simply committed to engaging in more discussions that will enable the company to keep doing what it’s been doing indefinitely.”

Gunnison County commissioner is optimistic

Gunnison County commissioner John Messner sees the governor’s letter in a more positive light.

“I think the governor’s letter sends a strong message that the analysis, development and implementation of a methane capture and utilization plan is expected in the North Fork of Gunnison County and the key word here is that it is to be implemented,” he said. “It also creates an expectation that a significant part of the royalty rate reduction should go toward this effort. It supports the work we are cooperatively doing with Delta County and the stakeholders in the methane working-group toward this goal.”

Messner and fellow commissioners met with Delta County commissioners this week to ratify a Memorandum of Understanding regarding the working group and the collective effort to capture and utilize the methane from the mine. They’ll do the same with additional stakeholders in coming weeks. “I am very optimistic about what we can accomplish,” Messner said.